2016 (12) TMI 1464 - AT - Service Tax

Judicial decision: Partial penalty relief granted under Finance Act; timely tax payment and management changes considered.

M/s Radhagovind Fertilisers & Chemicals Ltd. and M/s Rajlaxmi Agrotech (I) Pvt. Ltd. Versus Commissioner of Central Excise & Customs, Aurangabad

The Member (Judicial) waived penalties under sections 76 and 78 of the Finance Act, 1994 but upheld the penalty under section 77 for non-payment of ... Waiver of penalty imposed u/s 76,77 & 78 of the FA, 1994 - GTA service - payment of tax with interest on pointing out by Department, before issuance of SCN - is penalty justified invoking provisions of Section 80 of FA, 1994? - Held that: - The reason given for not paying service tax is that there is change of management in the company. From the data, service value was retrieved from the balance sheet of the appellants, that shows that the appellants have no intention to avoid the payment of service tax - appellants deserve the waiver of the penalties imposed under section 76 and 78. However, the penalty imposed under section 77 appears to be proper - penalties imposed u/s 76 and 78 waived and penalty imposed u/s 77 by maintained, invoking the section 80 of the FA, 1994 - appeal allowed - decided partly in favor of appellant. Issues Involved:Penalties imposed under section 76, 77 & 78 of the Finance Act, 1994 for non-payment of service tax liability.Analysis:1. Penalties Imposed under Section 76, 77 & 78:The appellants did not discharge service tax liability on the services of Goods Transport Agency (GTA) amounting to Rs. 1,86,587/- and Rs. 4,00,159/-. The appellants paid the entire service tax along with interest before the show cause notice was issued. The appellants argued that as per Section 73(3) of the Finance Act, 1994, no show cause notice should have been issued since the tax was paid before the notice. They attributed the non-payment to a change in management. Various judgments and board circulars were cited in defense of penalty waiver. The Revenue contended that penalties were correctly imposed and upheld due to the extended period of demand for service tax, citing relevant judgments.2. Adjudication:The Member (Judicial) considered both parties' submissions and found that the appellants had indeed paid the service tax liability along with interest before the show cause notice. The reason for non-payment was attributed to a change in management. The data retrieved from the balance sheet indicated no intention to evade tax. After reviewing conflicting judgments, the Member decided to waive penalties under sections 76 and 78 but maintained the penalty under section 77. The decision was made under section 80 of the Finance Act, 1994, granting partial relief to the appellants.This judgment highlights the importance of timely payment of taxes, the impact of management changes on tax compliance, and the relevance of legal precedents in determining penalty waivers. The Member's decision reflects a balanced approach considering the circumstances of the case and prevailing legal interpretations.